Several statistics from leading data aggregators agree to one thing, a rising DEX volume means that the DeFi top is nowhere near. In the past few months, volume on decentralized exchanges had exponential growth. Yield farmers are providing liquidity on more and more pools throughout the entire industry. Some DEXs went as far as to surpass CEXs. As Defiye previously reported, Uniswap exceeded the trading volume of Coinbase Pro by a significant margin.
While the space of decentralized finance had no luck in 2019, it finally gained tremendous value in 2020. DEXs are more popular than ever and almost everyone in crypto is farming at least one pool. With amazing returns that provide users with more equity than with mining, investors continue to capitalize.
Moreover, the industry gained many newcomers who are now leading protocols after only several months of existence. Yearn.Finance, developed by Andre Cronje, arrived on the DeFi scene with practically no funding. The project did not even have a premine. Yet, its native governance token YFI managed to even surpass Bitcoin in value. Today, Yearn.Finance is one of the leading DeFi protocols for borrowing, lending, and yield farming. We also have the case of Compound, a protocol that worked similarly. After the launch of its protocol, plenty of developers continued in Compound’s footsteps by creating governance tokens.
Why DEX volume will continue surpassing CEXs
The greatest feature of decentralized exchanges is that users have full custody over their assets. Furthermore, they can instantly make transactions. Because of that, DEX volume on protocols such as Uniswap naturally gains advances compared to CEXs. In Uniswap’s case, the automatic market maker allows anyone to list tokens. Through this, new projects can arise in DeFi without having to meet any strict requirements. Listing is free as well, so developers can create a startup with a small budget.
A gigantic demand for DEX services resulted in massive volume spikes. According to a report from leading Ethereum data aggregator Dune Analytics, the DeFi market now has $20 billion in liquidity. Uniswap, Curve, DDEX, and 0x lead the DEX market share with Uniswap contributing most to the liquidity.
On a yearly basis, DEX volume reached $44.6 billion. At the current pace of the market, DeFi can continue its exponential growth given that Bitcoin retains its stability. Moreover, most investors may entirely switch over to decentralized exchanges as some offer governance models. On SushiSwap, the community is already starting to vote for various features that introduce traditional trading tools. If the King of DeFi Uniswap were to introduce similar features as well, we expect adoption to skyrocket.
As we wrote earlier this month, Uniswap recently launched its UNI governance token. For now, governance functions are still restricted as developers wait for token distribution to evenly spread among holders. Once the community can start creating proposals, we expect numerous new features to launch on the DEX. With all of this information in mind, many have started to question whether centralized exchanges have any future at all.